Crude oil flows on two pipelines from the Permian Basin to the Houston area have slowed this month as differentials narrowed and volumes to another U.S. Gulf Coast hub ramped up, according to traders and data from market intelligence firm Genscape.
Cheap tariffs on EPIC Midstream and Plains All American Pipeline LP's lines from the Permian to Corpus Christi, Texas, are helping pull volumes from Houston.
Plains' Cactus II line, which opened in August, has increased its flows almost one-third over September, Genscape reported. It declined to disclose actual volumes. Plains did not immediately respond to requests for comment.
"There's been enough tariff compression on Permian-to-Corpus lines that if you can get your barrels directly to Corpus Christi as opposed to taking the route to Houston, you're going to do that," said Ryan Saxton, director of midstream oil at Genscape.
Crude volumes on Magellan Midstream Partners LP's Longhorn pipeline, which runs from the Permian to the Houston area, were about 208,000 barrels per day (bbl/d) last week, down from about 287,000 bbl/d in the week ended Oct. 4, according to Genscape.
Enterprise Products Partners LP's Midland-to-Sealy pipeline had flows of about 420,000 bbl/d last week, down from about 601,000 bbl/d in early October, the data showed.
Magellan declined to comment and Enterprise did not immediately respond to a request for comment.
"Spot volumes (on the Longhorn and Midland-to-Sealy pipelines) are nil this month as people jump on new lines and spot arbs become unworkable," one U.S. crude trader said.
The differential between crude prices in Midland and Houston narrowed to minus $1.87 a barrel (bbl) this week, after trading as wide as minus $13.20 a bbl in April.
In September, EPIC Midstream lowered spot rates on its 400,000 bbl/d line from the Permian to Corpus Christi to $1.35 a bbl. Plains set Cactus II contract rates between $1.05 and $3.20 a bbl. Analysts said most of its capacity is under contract.
Spot rates on the Longhorn pipeline from Crane, Texas, to Magellan's East Houston Terminal are about $4 to $5 per bbl.
Recommended Reading
Tallgrass Energy Announces Latest Open Season for Pony Express Pipeline
2024-03-12 - Prospective shippers can review details of the open season, which began March 11, after signing a confidentiality agreement with Tallgrass.
Kinder Morgan Exec: Don’t Count Out Midstream in M&A Frenzy
2024-04-02 - Kinder Morgan’s Allen Fore said 2024 should be an ‘interesting’ year in M&A during a discussion at DUG GAS+ Conference and Expo.
Energy Transfer Asks FERC to Weigh in on Williams Gas Project
2024-04-08 - Energy Transfer's filing continues the dispute over Williams’ development of the Louisiana Energy Gateway.
Balticconnector Gas Pipeline Back in Operation After Damage
2024-04-22 - The Balticconnector subsea gas link between Estonia and Finland was severely damaged in October, hurting energy security and raising alarm bells in the wider region.
Biden Administration Argues Against Enbridge Pipeline Shutdown Order
2024-04-11 - The U.S. argues that shutting down the pipeline could interrupt service and violate a 1977 treaty between the U.S. and Canada to keep oil flowing.